Idaho's Weekly Journal of Local & National Commentary Week
2815

“Deficit
spending is simply a scheme for the ‘hidden’ confiscation of wealth.”
– Alan Greenspan, published in Ayn Rand’s
Capitalism: The Unknown Ideal, 1967, and The Objectivist, July 1966

Boise,
ID – Whoa, girl friends, gather ‘round, shut up, pull up the floor and pour
yourselves another hot cup of Rocket Java. Before former Federal Reserve
Chief Alan Greenspan went over to the Dark Side of The Force, namely,
Keynesian socialist economics, he was a free market economist who blasted
the Welfare State, revealing that the true function of America’s Federal
Reserve central bankers is to act as a “legalized” government counterfeiting
ring whose “shabby little secret” is to rob the people with clever
complicated mechanisms whose series of complex steps involve the member
banks issuing and pretending that government bonds, not backed by anything,
are treated as if they were an actual deposit of gold, which they are not.

Read on and have your barf
bucket handy. You’ll need it as you discover that this is exactly what
every administration since the inception of the Federal Reserve in 1913 has
been doing, with President Barack Obama’s current administration running its
Welfare State on steroids. Says Alan Greenspan in Ayn Rand’s
above-mentioned publications:

“… But the
opposition to the gold standard in any form – from a growing number of
welfare-state advocates – was prompted by a much subtler insight: the
realization that the gold standard is incompatible with chronic deficit
spending (the hallmark of the welfare state). Stripped of its academic
jargon, the welfare state is nothing more than a mechanism by which
governments confiscate the wealth of the productive members of a society to
support a wide variety of welfare schemes. A substantial part of the
confiscation is effected by taxation. But the welfare statists were quick to
recognize that if they wished to retain political power, the amount of
taxation had to be limited and they had to resort to programs of massive
deficit spending, i.e., they had to borrow money, by issuing government
bonds, to finance welfare expenditures on a large scale… Thus, government
deficit spending under a gold standard is severely limited.

The abandonment
of the gold standard made it possible for the welfare statists to use the
banking system as a means to an unlimited expansion of credit. They have
created paper reserves in the form of government bonds which – through a
complex series of steps – the banks accept in place of tangible assets and
treat as if they were an actual deposit, i.e., as the equivalent of what was
formerly a deposit of gold…

The law of
supply and demand is not to be conned. As the supply of money increases
relative to the supply of tangible assets in the economy, prices must
eventually rise. Thus the earnings saved by the productive members of the
society lose value in terms of goods. When the economy’s books are finally
balanced, one finds that this loss in value represents the goods purchased
by the government for welfare or other purposes with the money proceeds of
the government bonds financed by bank credit expansion.

In the absence
of the gold standard, there is no way to protect savings from confiscation
through inflation. There is no safe store of value. If there were, the
government would have to make its holding illegal, as was done in the case
of gold… The financial policy of the welfare state requires that there be no
way for the owners of wealth to protect themselves. This is the shabby
secret of the welfare statists’ tirade against gold. Deficit spending is
simply a scheme for the ‘hidden’ confiscation of wealth. Gold stands in the
way of this insidious process. It stands as a protector of property
rights. If one grasps this, one has no difficulty in understanding the
statists’ antagonism toward the gold standard.”
– FM Duck